essay on economic challenges of pakistan

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Economy of Pakistan – Challenges and Prospects (CSS Essay)

Table of Contents

1. Introduction

Pakistan today, confronts multiple challenges which vary in intensity. Some of the challenges appear to be multi-dimensional and complex in nature which certainly will take many years to overcome. Interestingly, a few of the problems and challenges have been self-inflicted by the powerhouses that have caused a widespread socio-economic damage to this country. This way, the poor economy of Pakistan remains the chieftain among the challenges since the country’s birth. The weak and fragile structure and the picture of the economy of Pakistan are what inevitably produce other inter-linked social challenges, such as poverty and corruption.

One gets to know that ever-rising inflation, increasing unemployment, shrinking GDP and diminishing exports level are the major obstacles which restrict the ability of Pakistan to have a well-developed and flourishing economy. According to the Economic Survey of Pakistan 2016-17, the inflation rate in Pakistan grew to 5.02% from 4.78%; GDP growth rate went up to 4.71% from 4.04%; unemployment rate declined to 5.9% from 6%; interest rate is 5.75% which remains the same. Although the economic indicators are, by the large, not appreciable but a slight increase in GDP seems to be the positive development.

2. An Overview.

In 1947, Pakistan had 30 million people with per capita income of 100$. Agriculture accounted for almost 50% of economic output with hardly any manufacturing, as all industries were located in India. Therefore, it was unable to feed 30 million people and was dependent on PL-480 imports from the USA. From thereon, Pakistan has come a long way. Today with 170 million people, our per capita income in 2008 was 1000$ which was ten times more. Pakistan is the third largest exporter of rice in the world and producing enough food grains to feed its people. 3 million tons of rice is exported every year by Pakistan which is surplus to our requirements. Pakistan is also one of the five major textile producing countries in the world. So if we measure in relation to where we were vis-à-vis structure of economy, agriculture has come down from 50% to 20%. Therefore, out of total national income, agriculture’s contribution is just 20%, but instead of being deficient in food production, we are actually surplus and that is what productivity means i.e. by using the same land you produce more from the same inputs, that is how economic growth takes place. Agriculture is not only crops, within agriculture there has been a significant change. Livestock, dairy, mutton, beef, poultry and similar other products is 50% of agriculture output in Pakistan. Pakistan also produces third largest quantity of milk in the world. So within agriculture sector, there is a change i.e. major crops are only 36% of agriculture value added and 14% are minor crops, fisheries, orchards, fruits and vegetables. Thus, we are moving in a direction where the same land and same resources are being used more efficiently in order to produce more. As a contrast, agriculture is only 2.5% in the US having a population of 300 million, out of which they not only feed the entire population, but also export to the rest of the world. Therefore, it is important to understand that when it is said that agriculture is producing/contributing more, it is the productivity of agriculture rather than the share of agriculture in GDP. Manufacturing and industry now account for 25% of the income; when we recall there was not even a single industry worth its name at the time of partition. So if we look where we were and where we are, I think the justification for Pakistan in terms of betterment of economic conditions of Muslims in this part is very strong. But where we have failed is that we have not lived up to our potential. In 1969, Pakistan exports of manufactured goods were higher than the combined exports of Indonesia, Malaysia, Philippines and Thailand. In 1960’s Korea emulated Pakistan in its five years planning process. The tragedy is that even a country such as Vietnam which was completely devastated by the war has now overtaken Pakistan. Ten years ago, India which was way behind Pakistan (till 1990’s) is now way ahead. As an economist and student of globalization, the biggest challenge is: how can we organize ourselves to reach that position where at least we can be running not at the nine second a mile but at least ten second a mile race which is going on in the global economy.

3. Challenges to Pakistan’s Economy

(a) we consume more and save less..

People in Pakistan save only 14 pc of their monthly salary generally while worldwide, the average standard of savings is 27 pc. This is the contrast as to why we are in serious difficulty because as a nation this is a problem which we have to recognize. We have to at least double on savings rate otherwise we will remain dependent on foreign sources.

In Pakistan educated people are also more likely to keep their savings at home instead of in the banks.

This was disclosed by Standard Chartered Bank’s study ‘Emerging Affluent Consumers in Asia – The Race to Save’. This survey was conducted in 8 countries including China, Hong Kong, Singapore, India, Taiwan, Korea, Kenya and Pakistan. The survey further said that emerging affluent consumers in Asia could boost their savings by an average of 42 per cent if they move from a basic savings approach to a low-risk wealth management strategy.

(b) We Import More and Export Less.

Pakistan’s trade deficit has hit a record level of 30 billion US dollars in the first 11 months of 2016-17, showing a jump of 42 per cent as compared to the same period in the previous financial year. Exports have declined by three per cent to 18.5 billion US dollars while imports have gone up by 21 per cent to 48.5 billion US dollars. As a nation we prefer to use even the basic commodities of foreign countries rather than locally manufactured goods. Unless we do not change this attitude of preferring the imported goods we have to keep on relying on outsiders to fill in this gap b/w our imports and exports. Relying on outsiders’ means that there are cycles, ups, and downs i.e. when things are good, one gets financing, and when things are bad one starves for financing. No nation which strives to preserve its honour must go through this particular route. The lower is this gap between our export earnings and expenditure on imports – and that can be achieved only by expending our exports; our reliance on external sources would be reduced.

(c) Government spends more than it earns as Revenues.

Fiscal deficit is the difference between the revenues which are collected in a year and the total expenditure incurred by the Government. Pakistan’s government takes away 20% of national income as its own. 80% is left in the private sector and 20% in the hands of the government is spent on defence, debt servicing, development on education, health, general administration etc. Country’s budget deficit, a gap between expenditures and revenues, was recorded at 5.8 percent of the GDP during FY2017 as against the target of 3.8 percent of the GDP. In expenditures, the government had spent Rs888.1 billion on the country’s defence. Similarly, a massive amount of Rs1348.4 billion was spent on paying the country’s interest on domestic as well as foreign borrowings. The government had earmarked Rs.1,360 billion in annual budget for paying interest on domestic as well as foreign loans during fiscal year that started from July 2016 and ended in June 2017. The revenue generated is only 15% of the GDP at best, and in the worst days it is 12 to 13%. Out of the every rupee of income received by a Pakistani, on average, tax paid is only 9 paisas and 91 paisas remain with the individual. In 2007-2008, Pakistan’s fiscal deficit was more than 7% which means its income or revenues were only 13% of GDP whereas, expenditures were 20%. Therefore, fiscal deficits have to be financed from somewhere, so how do you finance them; you either go again begging the external donors, or to the State bank of Pakistan. The financing provided by the State bank of Pakistan is dangerous because it creates high inflation in the economy, which is injurious to the middle class, those earning fixed wages and salaries, and the poor. Therefore, there is an uproar in the country if the inflation rate goes up. Continuing large fiscal deficits year after year may plunge the country into debt trap again.

(d) Our Share in the World Trade is shrinking.

In 1990, Pakistan’s share was 0.2% of the world trade. After 20 years it has come down to 0.12% in a very buoyant world economy. World trade has been growing faster as compared to the world output. India in the same period had doubled its share from 0.7% to 1.4%, while Pakistan is going the other way and that is the reason why exports/imports imbalance is increasing. We are not taking advantage of the opportunities which a buoyant world economy is providing. Pakistan is stuck with only a few commodities – textiles, leather, rice, sports, goods and the surgical goods. We have not entered the markets for more dynamic products. All our exports are to a few markets – the USA, EU and the Middle East. So this narrow export base and very limited geographical spread are not allowing us to expand our share. Unless we improve the quality of our products, go out and do the marketing abroad, invest in research and development, the prospects do not look promising. That is why we are lagging behind other countries which from way back are over taking Pakistan.

(e) We Badly Lag in Social Indicators.

One of the most glaring weaknesses is that a country like Pakistan that should have had best indicators in literacy, infant mortality, fertility rates, in access to water supply, in primary enrolment ratios has social indicators which are more comparable to Africa rather than to the countries of similar per capita income. Even Tajikistan, which is a very poor country, has better literacy rate and primary enrolment ratios than Pakistan. What does it means? It means that if we had literacy rate of 100% instead of 55%, then in 2009-2010 our per capita income would have been 2000$ rather than 1000$. Instead of 30 million middle class in Pakistan we would have 60-70 million middle class people; we would have poverty reduced to 15-20%. We have committed to achieve the millennium development goals by 2015 i.e. we will be able to reach 80-85% literacy rate, but it is doubtful that this will happen. Why do we have regional inequalities? Why Baluchistan is lagging behind other provinces? It is because of literacy rates and primary enrolment ratios. There is a direct correlation between regional inequities and backwardness with the level of education.

(f) We Face Energy and Water Shortages.

Another challenge we face today is energy and water shortages, and that is not because we are not generating enough electricity or we are not having enough water. With the losses of KESC from the point it has generated to the point they realize the billing is 45%, so 55% people are paying for those who are stealing the electricity. Government of Pakistan out of its own limited resources is paying 200 billion rupees every year as subsidies for electricity. Our industry is at a disadvantage that they get the orders from foreign countries but they cannot execute the orders because there are electricity outages. In addition to economic losses it also creates inconvenience for pursuing normal life. We have silting of our dams, but no additional dams have been constructed since Tarbela in 1974. We have water course losses of about 20-25%. Even after these losses, the water is inequitably distributed. The influential land lords are able to take greater share of water from the canals as compared to poor farmers. Therefore, the productivity of poor farmer is only one ton per acre as compared to 3 tons by large holders. If we provide the water equitably to the small farmer, he would also be able to increase the productivity from one to at least two tons resulting into additional income, increase in exports of food grains, cotton and fruits and vegetables which will add to export earnings of Pakistan. With the climate change taking place with all the glaciers in Himalayas which are going to melt, we are going to have difficulties in future due to global warming.

(g) Cost of Doing Business is High.

Pakistan has slipped three places on the Word Bank’s Ease of Doing Business Index 2017 and is now ranked a lowly 147th among 190 economies, denting the government’s pro-business image ahead of next general elections. The index is mostly used as a guide by foreign investors to learn more about a country, aiding decisions on pouring in money in the economy. Pakistan, however, slipped from its last year’s rating despite the introduction of some reforms in areas of starting a business and making international trade relatively easier. If one government department is to be blamed for the overall poor performance, it is the Ministry of Finance, as the country’s ranking nosedived on the indicators of paying taxes and getting credit. Pakistan lost 16 positions on the indicator of paying taxes, standing at 172, according to the 2018 report. Last year, Pakistan’s ranking was 156. One of the reasons behind the dismal performance was the increase in overall tax rates that surged to 33.8% of total profits. Lack of coordination among various government agencies, innumerable laws and regulations that are antiquated and outdated have proved to be serious impediments. Labour laws, inspections by multiple agencies, the delays in the court system, infringement of intellectual property rights and evasion of taxes by competing firms in the informal sector have rendered some of the well-established firms unprofitable, or the feasibility of starting near ventures questionable.

(h) Crisis of Governance and Implementation Weaknesses.

If we glance on policy documents of various governments on education, agriculture, health, trade policy etc, and look at the same policy forty years ago and the problems, there is hardly any significant record of implementation of those policies or plans over this period. We produce five years plans and all kinds of medium term frameworks, but it is the poor governance and implementation that are the weak links in getting things done. Unless we strengthen civil services and bring about a merit based system of recruitment, promotion, performance evaluation, compensation, disciplinary action, etc, we will not be able to see any difference in the quality of governance. Orders are given by the higher ups but they are not carried out; summaries are approved, but they remain buried in the files and therefore; whether it is education, health, water supply, revenue or law and order, you can pin down the problem to the governance issues. Unless we fix the governance issue, the economy is not going to take off at the speed which is required.

(i) Uncertainty and Unpredictability due to Lack of Continuity.

Every government whether military or civilian starts with a clean slate, as if nothing happened before them and nothing will happen after them. This is not the way the real world works. You take the projects and programmes which were initiated by the previous governments, evaluate them as to what the strengths and weaknesses were, fix those weaknesses and carry them forward. It will take only few years to bring these inherited projects to completion and the country will benefit from new motor ways, new ports, highways, educational institutions etc. But the blame game of successive governments results into abrupt termination of all such projects and programs. When these are resumed the cost has escalated three times and it takes several additional years to complete them. In the meanwhile the people of Pakistan suffer because of this lack of continuity. When faced with such unpredictability about the future, the investors are pondering whether they should invest in this country as they are uncertain whether the new government when comes in would stop or alter what the previous government was doing, or adhere to the commitments made to them. Take the example of Higher Education Commission, which was sending 1700 students for PhDs abroad but the new government comes in and suspends the funding of those programmes. This solved down the process of faculty development for our universities at a time when we should have been sending twice as many scholars.

(j) Political Stability, Law and Order/Security.

The overall arching theme is that for a robust economy we should have political stability, law and order and security. The Armed Forces of Pakistan deserve gratitude for what they have done in Malakand Division to bring about stability as far as the law and order situation is concerned. The sooner the country is gotten rid of this image of political instability, poor law and order situation and insecurity, whereby investors from all over the world hesitate in coming to Pakistan and invest, we will not be able to make any progress in this country. In 2007, Pakistan was one of the most favorite countries among the international investor community. A thirty year piece of paper was floated, which was a bond for Pakistan to be paid in 2037 and Pakistan got four times over subscription at a price which was only 300 basis points above the US treasury. Very few countries can claim to have that kind of credibility with international fund managers. However, in two years’ time we have missed that boat. Therefore, it is imperative that we resume the journey which has been interrupted by nurturing a stable, secure and peaceful political environment.

4. Prospects/Solutions to Improve Economy

How can we overcome these challenges and problems and improve our economy? A lot has been written and talked about, but I will focus on only a few action points.

(a) Change in National Psyche and Mindset.

We as a nation are too much negative oriented and too much cynical where we find everything wrong in this country. Unless we change our mindset and unless everybody who is doing what he is supposed to do, carries out his or her task with sincerity and honesty, we are not going to go anywhere. We should not expect any Messiah to come and fix our problems we have to do it ourselves individually and collectively. There are no short cuts available. Media is muddying the water by their sensational stories and inviting so called experts who contribute in projecting negative thinking and negative national psyche. Unless we have a positive “can do” mentality, it will be difficult to progress. Unless each one of us changes our mindset rather than blame the government and the system, we are not going to go anywhere in this race for global economic survival. This is easier said than done. But I expect our younger generation to be more responsive and responsible.

(b) Building up of Human Capital.

There is no substitute to building up human capital. Private sector, public sector, NGOs, local communities, philanthropists etc, all here to put their hands on deck and participate in making sure that every child goes to school. Every high school graduate has some technical and vocational skill or goes for higher education. Unless we build up human capital, we are just going to be left behind because the world economy is going to be a knowledge based economy. It is not an economy where you memorize material or reproduce that in the exam and forget about it – that is no longer the case. One has to acquire the knowledge and use it in order to apply to problem solving. This is a new paradigm where human capital is as important as machinery and equipment. Pakistan lags behind other countries in the institutions, infrastructure and incentives for human capital formation. We have no choice but to accelerate the pace to catch up with others.

(c) Use of Technology.

The technology is spreading like a wild fire. How many people five years ago could have thought that even in a small towns and villages of Pakistan, one would access to mobile telephones. 95 million Pakistanis have mobile phones today. You can use this technology in order to provide those banking services, information on climate/weather, agriculture extension, health, education etc. It is a powerful tool which can leapfrog a lot of time which we have wasted. Using technology particularly the information/communication technology for the betterment of social and economic problems of Pakistan is something which needs to be done but it cannot be done the way we have compartmentalized this into different ministries. A more holistic and comprehensive approach that deploys technology for poverty reduction has to be put in place.

(d) Young Labour Force.

Pakistan is one of the few countries which has a young labour force which can be harnessed for its own and global economy. Pakistan’s youth cohort makes up over 60 per cent of the population , providing Pakistan an opportunity to leverage their strategic position in order to enhance the country’s economic growth Japan, Europe, USA and after 2050 China are going to have aging population where the ratio of old to young people is going to increase. India and Pakistan are two countries where the ratio of younger people to the older ones is going to increase. If we tool these young men and women properly, we increase the female labour force participation, give them skills and knowledge, they can become the labour force for the rest of the world. This will give a big boost to Pakistan’s own economy. In 2001, worker remittances were less than a billion dollars; today we have almost 7-8 billion dollars. Now this can be multiplied by three or four times if we have educated labour force i.e. skilled labour force going for overseas employment. This is also a way to create employment opportunities because if you have large number of younger people coming to labour force and you don’t have job opportunities for them you can have social upheaval. Therefore, it is imperative to create employment opportunities for them and one of the avenues is to train them in the kind of the skills which are needed not only by the national economy but also by the international economy.

(e) Governance, Devolution and Decentralization.

As the population is increasing, one cannot govern Pakistan sitting in Islamabad, Karachi, Lahore, Peshawar or Quetta. One has to devolve powers, decentralize and delegate authority, provide resources to the local/district governments so that they can take decisions at their own. Those decisions would be very much in accordance with the requirements and the needs of those communities. Sitting in Islamabad one cannot visualize what is needed in Chaghi or Loralai, but the people in Loralai and Chaghi know exactly whether they need water, fertilizers or fruit processing industry. Let us devolve powers to the people at the grassroots level and there would be much better allocation and utilization of resources. There must, however, be accountability of the local governments by the provincial governments and of provincial governments by the federal government but not interference or usurpation of powers. If we do that, then a lot more can happen with same amount of resources which are being wasted today, and the economic growth rate can be raised from 6-7 percent average to 8-9 percent annually.

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Economic Crisis in Pakistan: Challenges and Remedies

• Bilal Ahmad
• November 26, 2022
• Daily Write-Ups , Economy of Pakistan
• 40753 Views

The following article is written by Bilal Ahmad , a student of Miss Syeda Saba and Miss Iqra Ali . For years, Miss Syeda Saba has been known for her Grammar teaching methodology, and Miss Iqra Ali for being a top-notch writer and a writing coach.

The decade of the 1960s is considered the golden age of economic growth in Pakistan. Due to the policies of the Ayub Khan regime, economic growth was so impressive that it was seen as a model of economic development by many developing nations. Unfortunately, things continued getting worse thereafter and have now reached a point where most economists think that Pakistan is heading towards bankruptcy. The economic situation of Pakistan is at a critical stage. Today, the country faces serious economic challenges, the first one among which is the ballooning trade deficit. Pakistan is an import-driven country where imports surpass exports. Another challenge is the fiscal deficit, when the expenditure of a government is greater than its total revenue collection. Resultantly, the government has to borrow money from international and national financial institutions such as the World Bank, International Monetary Fund, and Asian Development Bank so that it can enable higher spending without having to increase taxes. The shortage of power and water is also a gigantic economic challenge. The prevailing energy crisis in Pakistan is eating up two percent of the economy; it is because all sectors of the economy are heavily dependent on power consumption. Frequent power outages have immensely damaged the industrial production and overall performance of all the other sectors of the economy. The water crisis is also the biggest issue for economic growth. The water crisis is hampering agricultural production, which has a significant share of the economy. The high cost of doing business is another challenge that needs to be addressed urgently.

Numerous problems and hurdles in the way of starting a business, such as a delay in communication, centralized decision making, lack of loyalty, lengthy registration procedures, and lack of skilled labour force, make it expensive and unaffordable for investors to start a business in the country. This is a serious barrier to economic growth. Another serious challenge Pakistan’s economy is faced with is poor governance, which has stymied smooth and sustainable development. Good governance comes through strong, independent state institutions. A country cannot grow unless the issue of poor governance is resolved. Political instability is like the sword of Damocles for our economy. There is no denying the fact that the political environment of a country has a profound impact on its economy. In a stable political environment, the government does not have to strive for its survival and is able to pay full attention to the economic well-being of the nation by devising long-term policies. Unfortunately, the political conditions of Pakistan have never remained stable. History reveals that since its inception, the country has been longing for a stable democratic government. The law and order situation has also taken a heavy toll on our national economy. Peace and progress are both intertwined. Peaceful conditions are crucial for attracting foreign and local investors.

First and foremost, Pakistan needs to ensure an environment conducive to investors so that foreign direct investment in the country can be increased. The government should offer tax incentives for the establishment of industrial units in various sectors as such units will provide employment to the youth and will also add to the government’s revenue collection. Second, the domestic investment must be encouraged through more flexible tax policies, particularly for small and medium enterprises. Such measures would stabilize the economy and reposition Pakistan on the international stage as an attractive destination for foreign investment. Third, Pakistan needs to focus on building up its domestic industry to expand its exports. All the hindrances to the development of domestic industry must be removed. Fourth, Pakistan must modernize its industrial and agriculture sector. New plants and equipment must be installed for the purpose of enhancing the quality and quantity of industrial production. Fifth, Pakistan needs to broaden its tax base. Currently, the agriculture sector is not being taxed, while large businesses are also often given a big tax break. The tax base can be widened by taxing the agricultural sector and undue tax amnesties to large businesses. Also, there is a dire need to introduce tax reforms and strengthen tax collection coordination at the national and provincial levels. Last but not least, advancement in the field of science and technology is the key driver for the acceleration of economic development. Pakistan needs to invest in the field of science and technology as it will have a positive influence on the agricultural and industrial output.

Taking everything into consideration, it can be said that the country’s severe economic challenges can be tackled if effective strategies and policies are devised and implemented. The country can revive its economy through institutional, educational, industrial, and agricultural reforms. In this way, it can be hoped that Pakistan will become a model of economic development for developing nations around the world.

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Pakistan’s economic crisis: unveiling the causes, impacts, and remedies, dr. ali sajjad, 30 october, 2023.

Pakistan has been grappling with an economic crisis in recent years, which is marked by high rates of inflation, a declining currency, and an increasing debt load. The country’s population has been significantly impacted by this crisis, with many people finding it challenging to meet their financial obligations. This blog will cover the reasons behind the current economic crisis, its effects on the nation, and potential solutions to the problem.

Causes of Crises

1 – external debt.

Pakistan’s current economic crisis is primarily caused by its external debt, which amounts to $126.3 billion. The country owes this debt to a wide range of creditors, including multilateral organizations, Paris Club nations, private and commercial lenders, and China. The growth of this debt load can be attributed to several factors such as excessive borrowing, slow growth, weak exports, and currency depreciation. Pakistan’s foreign exchange reserves are currently around $4 billion, which is insufficient to pay for even one month’s worth of imports.  As a result, there is a significant chance that the nation will not be able to pay its debts in full

2 – Inflation

Pakistan is currently facing a decline in the purchasing power of its populace and an increase in poverty due to a record-breaking inflation rate of over 25%. The rising costs of food, fuel, electricity, and imported goods are the primary causes of this inflation.  The government’s expansionary fiscal and monetary policies, which were implemented to boost the economy in the face of the COVID-19 pandemic, have further exacerbated the inflationary pressure.

3 – Energy Crises

Pakistan is currently dealing with a persistent energy crisis that has seriously hampered its ability to produce goods and expand its economy. The country relies heavily on imported petrol and oil, which are expensive and prone to price volatility. Unfortunately, poor management, corruption, and a lack of investment in renewable energy sources have resulted in insufficient and inefficient domestic energy production. As a result, Pakistan frequently experiences load shedding and power outages, which negatively affect millions of homes and businesses. The country’s GDP has decreased by up to 4% recently as a result of energy shortages.

4 – Political Instability

Pakistan’s financial instability is significantly impacted by its political instability. Frequent changes in government, governance, and political unrest have weakened foreign and domestic investor confidence. This has led to a decrease in foreign direct investment (FDI), causing capital flight and lowering the likelihood of economic growth. Exchange rate volatility, caused by political unrest, harms businesses that depend on stable exchange rates for international trade. Inconsistent economic policies and budgetary constraints lead to budget deficits and increased borrowing, elevating the risk of sovereign debt crises. Insecurity issues related to political instability, including terrorism and civil unrest, disrupt economic activities, deter foreign investment, and damage infrastructure, collectively contributing to economic and financial instability in Pakistan. The political uncertainty has undermined the confidence of investors, creditors, and the public in the government’s ability to address the economic challenges.

Consequences of Crises

1 – social unrest.

Due to the economic hardships the Pakistani people have experienced, there is a great deal of unhappiness and frustration, which has taken many different forms, including protests, strikes, riots, and violence. The social fabric and confidence in the government have been damaged by the rising cost of living, unemployment, inequality, and insecurity. The nation’s stability and unity are in danger as a result of the economic crisis’s escalation of ethnic, sectarian, and regional tensions.

2 – Security challenges

Pakistan’s current economic crisis has significantly weakened its capacity to address both internal and external security challenges. The country is currently grappling with a resurgence of terrorism perpetrated by various militant groups. These groups have exploited the economic crisis to further their nefarious activities, posing a significant threat to Pakistan’s stability and security.

3 – Regional implications

Significant effects of Pakistan’s economic crisis on regional stability and growth. Pakistan, a nuclear-armed nation with a population of more than 200 million, is very significant from a geopolitical standpoint. The potential collapse or instability of Pakistan’s economy could have significant repercussions for its neighbors and the global community.

Solutions to the Crisis

To address the economic crisis in Pakistan, the government and international community must act urgently and comprehensively. The following are some possible solutions:

1 – Debt relief

Pakistan may think about asking for debt relief from its creditors to lessen payback pressure and spend resources for growth. The government can negotiate a favorable debt rescheduling or restructuring with its creditors. Pakistan might also receive crucial financial aid and policy direction by asking the International Monetary Fund (IMF) for help in restarting the halted bailout program.

2 – Structural reforms

It is essential to put structural changes into place to address the underlying causes of Pakistan’s economic problems. To lower inflation, the budget deficit, and the national debt, the government should implement responsible fiscal and monetary policies. To increase revenue production and boost efficiency, it is essential to improve tax collection and expense management. Additionally, expanding export markets and encouraging the export sector can increase foreign exchange revenues. Reduced reliance on imported oil and gas can be achieved by making investments in the energy sector and the development of renewable energy.

3 – Political dialogue

Pakistan must resolve its political crisis through constructive dialogue and consensus-building. The government and the opposition should engage in a peaceful and productive dialogue to end their confrontation and find a mutually acceptable solution to their differences. The government and the opposition should also work together to address the economic challenges and implement the necessary reforms. Both parties must respect the rule of law, the constitution, and the democratic process to ensure the legitimacy and stability of the political system.

4 – International collaboration

By enlisting the aid of its allies and partners, including China, Saudi Arabia, Turkey, Iran, and the United States, Pakistan can improve its international collaboration. This may result in financial support, business opportunities, easier commerce, and technological breakthroughs. The government should also improve ties with its neighbors, especially with India and Afghanistan, to promote regional peace and cooperation. By taking part in regional initiatives, Pakistan can gain from regional connection and integration.

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Dr. Ali Sajjad is currently working as an Assistant Professor at Chaudhary Abdul Rehman Business School, Superior University. From the University of Utara Malaysia, he obtained a PhD in Banking and Finance. Moreover, he is a researcher having years of teaching and research experience. He has several publications and his area of research is accounting, finance, entrepreneurship and Islamic finance.

Please note that all opinions, views, statements, and facts conveyed in the article are solely those of the author and do not necessarily represent the official policy or position of Chaudhry Abdul Rehman Business School (CARBS). CARBS assumes no liability or responsibility for any errors or omissions in the content. When interpreting and applying the information provided in the article, readers are advised to use their own discretion and judgement.

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Pakistan’s economic crisis

• Sonia Mishra

FACULTY Q&A

Pakistan is facing a multidimensional crisis. Its economy is teetering on collapse due to a possible political crisis, the rupee plummeting and inflation at decades-high levels, devastating floods, and a significant shortage of energy.

Offering his insight on the situation is John Ciorciari, professor and associate dean for research and policy engagement at the University of Michigan’s Gerald R. Ford School of Public Policy. He is also director of the Ford School’s International Policy Center and Weiser Diplomacy Center.

How bad is the economic crisis in Pakistan, especially after the floods?

Pakistan faces a severe economic crisis and clearly requires external support. Foreign exchange reserves are at dangerously low levels—enough to pay for only a few weeks’ worth of imports. Inflation is at its highest levels in decades, growth is sagging and the central bank has raised interest rates sharply to address a weak currency. Food and fuel prices are causing real pain to ordinary people, and the country’s economic challenges are only exacerbated by the devastation wrought by the floods.

The economy was struggling even before the floods. What are some of the other causes?

Pakistan’s economic crisis has numerous causes. Weak governance and political instability have been significant factors, weakening investor confidence in the country and contributing to corruption and pork-barrel politics that undermine the country’s fiscal position. Pakistan is also highly import-dependent, particularly with regard to energy, which renders it acutely vulnerable to hikes in global oil and gas prices. The pandemic did not help, and Pakistan’s tense relations with India continue to deprive it of a potentially transformative trading and investment partner.

The international community has pledged $9 billion to help them. Some of the biggest donors are Saudi Arabia and China. Do you think these governments will expect support in any way from Pakistan in return?

Donors such as China and Saudi Arabia may not include many explicit conditions to their aid, but implicit strings are always attached. China will look to Pakistan for favorable development opportunities, such as the energy corridor running from the Arabian Sea to China’s western provinces and the strategically vital port of Gwadar. China will also seek Pakistan’s support on geopolitical issues ranging from the Taiwan Strait to Afghanistan and Ukraine.

Saudi Arabia sees Pakistan not only as a key oil purchaser and source of migrant labor but also as a key Sunni-majority ally vis-à-vis Iran. Riyadh will expect Islamabad to support Saudi initiatives in the Persian Gulf and Saudi leadership stemming from its role as guardian of the holy sites of Mecca and Medina.

Is $9 billion enough to help them rebuild and make it out of the crisis?

Pakistan will need an infusion of more than $9 billion to climb out of the crisis. However, much should come from private sources. The value of IMF funds is to provide a stopgap, rebuilding confidence in a way that encourages private flows to resume.

Will Pakistan be able to protect itself from inevitable future climate disasters?

Pakistan is highly vulnerable to climate-linked disasters and cannot alone build a fortress against climate change. Stronger domestic preparedness and resilience are clearly needed, but ultimately Pakistan’s fortunes will hinge primarily on global progress to address the drivers of climate change.

Will all the money pledged to Pakistan be used towards flood recovery, or do you expect some might help their federal reserves that were at dangerous levels before the flood?

First and foremost, IMF funds will help Pakistan avoid default on its international obligations, which could have seismic consequences for its economy and its people. Replenishing foreign reserves is crucial in this regard. Aid programs will also help address the flood recovery, but this will be much more manageable if Pakistan’s reserves rise to levels that instill confidence in its ability to pay its debts.

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Navigating Economic Challenges in Pakistan: A Comprehensive Analysis and Roadmap for Solutions

• February 16, 2024

Pakistan faces a myriad of economic challenges that hinder its growth and development potential. From persistent fiscal deficits to high unemployment rates and low human capital investment, the country grapples with a complex array of issues. In this article, we examine the key economic challenges confronting Pakistan, analyze their underlying causes, and propose potential solutions to chart a path toward sustainable economic progress.

One of the most pressing economic challenges in Pakistan is its chronic fiscal imbalance. The government consistently struggles to contain its expenditures while generating sufficient revenue to meet its obligations. High levels of debt servicing, coupled with subsidies and inefficient public expenditure, exacerbate the fiscal deficit, putting strain on the economy.

To address this issue, Pakistan must focus on revenue mobilization efforts, including broadening the tax base, improving tax administration, and reducing tax evasion. Additionally, rationalizing expenditure priorities, enhancing public financial management, and implementing fiscal consolidation measures are crucial steps toward achieving fiscal sustainability.

The high rate of unemployment and underemployment poses a significant barrier to Pakistan's economic growth and social stability. Despite its large and youthful population, the country struggles to create sufficient job opportunities to absorb new entrants into the labor market. The informal sector predominates, characterized by low productivity, inadequate wages, and limited social protections.

To tackle unemployment, Pakistan needs to prioritize policies that promote inclusive growth, entrepreneurship, and skills development. Investing in education and vocational training programs tailored to the needs of the labor market can enhance employability and productivity. Furthermore, fostering a conducive business environment, promoting innovation and technology adoption, and encouraging private sector-led job creation are essential for stimulating economic dynamism and job growth.

Inadequate investment in human capital development is another critical economic challenge facing Pakistan. Despite significant gains in primary education enrollment, quality remains poor, with high dropout rates and substandard learning outcomes. Moreover, access to healthcare services is limited, particularly in rural areas, resulting in poor health outcomes and productivity losses.

To address this challenge, Pakistan must prioritize investments in education, healthcare, and social protection programs. Enhancing the quality and relevance of education, expanding access to healthcare services, and promoting nutrition and sanitation are essential for building a skilled and healthy workforce. Additionally, targeted social safety nets can help alleviate poverty and inequality, enabling marginalized groups to participate more fully in economic activities.

Inadequate infrastructure, including energy, transportation, and water supply, constrains Pakistan's economic competitiveness and productivity. Power shortages and unreliable utilities disrupt industrial operations, while inadequate transportation networks impede the movement of goods and people. Furthermore, water scarcity and inefficient irrigation systems exacerbate agricultural productivity challenges, threatening food security and rural livelihoods.

To address infrastructure deficiencies, Pakistan must prioritize investments in critical infrastructure projects, including energy generation, transportation networks, and water management systems. Public-private partnerships can help mobilize financing and expertise for infrastructure development, while regulatory reforms and transparent procurement processes are essential for ensuring project efficiency and accountability.

Overcoming Pakistan's economic challenges requires a comprehensive and concerted effort by government, private sector, and civil society stakeholders. By addressing fiscal imbalances, promoting job creation, investing in human capital, and improving infrastructure, Pakistan can unlock its growth potential and create a more inclusive and resilient economy. With strategic reforms and prudent policy interventions, Pakistan can navigate its economic challenges and chart a path toward sustainable development and prosperity for all its citizens.

By: Qurat Ul Ain Sabir

Member Legal Awareness Program

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Daily Times

Your right to know Saturday, May 18, 2024

Pakistan’s Economic Challenges and Way Forward

Hafiz Ahsaan Ahmad Khokhar

June 11, 2023

Even though Pakistan’s economic crisis in 2022-2023 is a recurring factor in the country’s political unrest, it has a history of ignoring the nation’s true issues, which include poor governance, a broken judicial system, outdated laws, complicated tax system, lack of transparency, duplication in the government system, ineffective bureaucracy, improper use of our human, natural and water resources, lack of efficient local government, inadequate/unreliable data for country’s planning, and the consistent flaws in policies in execution by the government departments. Pakistan’s GDP growth rate has always remained below its potential despite efforts to boost economic growth. The development of important sectors and investment prospects was hampered by inadequate revenue collection, structural problems, and governance issues.

Since it has been causing serious governance and economic issues for years, the cost of goods, food, petrol, and other necessities has increased, and inflation has almost reached 45 per cent, which is not bearable for the common man. On the other hand, there has been an increase in dissatisfaction among the public that no state institution is performing well and to save them from the haughtiness and bad administration pervasive in the system. The only way for this to go from a failure to a success story, as in other countries, is if the federal and provincial governments defy them and pursue fundamental changes in governance, fairness, openness, accountability, and the consistent economic policies minimum for 15 years.

Other troubling issues also exist, posing obstacles to our economy’s expansion. Pakistan is ranked 173rd internationally for tax payments. According to a World Bank analysis, Pakistani businesspeople pay 47 taxes yearly, compared to those of Hong Kong, the United Arab Emirates, Ireland, Malaysia, Sri Lanka, and India, which are the countries with whom Pakistan must compete. A single business that conducts business in four different Pakistani provinces annually disburses five corporate income taxes, twelve employer-paid pension contributions, twelve Social Security payments, one property tax, one professional tax, one vehicle tax, one stamp duty payment, one fuel tax payment, and twelve payments of goods and sales tax.

An exporter needs 75 hours to complete border compliance and document compliance

Additionally, Pakistan dropped 23 spots on the indicator for corporate loan availability. The nation was ranked 105th this year as opposed to 82nd last year. There wasn’t much money left to fund the company’s expansion because of the government’s expanding budget financing requirements. Pakistan’s Human Development Index (HDI) as of 2022 is 0.544, placing it 161st out of 192 nations. The HDI of Pakistan is among the lowest in Asia, right below Yemen and Afghanistan. The country dropped one spot, moving to positions 142 and 170 on the indices for registering businesses and properties, respectively. There are 12 different treatments, and it takes roughly 18 days to finish them all. Similarly to that, it took many days to register a property. The nation climbed nine spots in the rating for handling building permits, landing at position 141. It takes an investor 252 days to complete 15 different types of procedures to obtain a building permit.

Pakistan has had trouble raising enough money to cover its expenses. Due to the low tax-to-GDP ratio, borrowing and outside help are heavily relied upon to close the fiscal imbalance. In Pakistan, there is a recurring budget deficit because the government spends more than it takes in. The national debt burden has risen, as a result, needing substantial financial resources for debt repayment. Both internal and external debt in Pakistan has been constantly rising. The budget is largely consumed by debt servicing; leaving little money for social welfare and development initiatives. Circular debt, which is the accumulation of unpaid invoices and pending payments among power generation firms, distribution companies, and the government, is a problem in Pakistan’s energy sector. This problem has a significant negative impact on the power sector’s finances and hinders its ability to meet the rising energy demand.

Though Pakistan did move one spot on the index of cross-border trade, it still fell into the worst 20 economies at position 171. An exporter needs 75 hours to complete border compliance and document compliance, which needs to be streamlined. Pakistan is ranked 156 on the index of enforcing contracts, one spot higher than the ranking from the previous year. This is, once again, a very important problem for boosting the economy and for regaining the confidence of both domestic and foreign investors.

According to the World Bank’s Ease of Doing Business Index, Pakistan is ranked 136th in the world overall and 172nd, in terms of tax compliance. According to these rankings, the major obstacles to economic investment at the moment are the government’s complex systems, lack of transparency, and complex tax laws and regulations. Further, to boost foreign exchange revenues, the federal government must prioritize export promotion strategies. This can be accomplished by increasing export competitiveness, diversifying export products, supporting exporters, and locating new markets through trade agreements and diplomatic efforts.

The World Bank’s Paying Taxes report states that the sub-indicators of the overall measure of paying taxes, such as the number of payments and time to comply, in particular, evaluate the advancement of online tax filing and payment. The extent of these indicators decreases as IT-enabled tax system procedures increase. According to this data, Pakistan is ranked lower among the Asian Pacific nations for overall taxpayers. In other words, the lack of effective IT-based systems in the mechanisms for collecting taxes is represented in higher magnitudes of the “number of payments” and “time to comply” indicators, as in the case of Pakistan. As a result, the project of initiatives in IT has the potential to raise Pakistan’s standing in terms of tax compliance and commercial accessibility.

Several actions can be taken to address Pakistan’s fiscal and economic issues and provide pave the road forward such as strengthening tax administration and broadening the tax base by bringing more individuals and businesses into the tax net. It is crucial to promote economic documentation to increase revenue collection, diminish the informal economy, fight tax evasion, and boost tax collection methods through automation and digitalization. To lessen reliance on external borrowing and manage the present debt burden successfully, a strong debt management strategy is also urgently needed.

Additionally, to encourage investment and job creation, it is crucial to make doing business easier by streamlining regulations and removing administrative roadblocks. Additionally, it is crucial to take action in key industries like manufacturing, information technology, and agriculture. By reducing bureaucratic red tape and streamlining regulatory processes, the ease of doing business is increased. It is also crucial to support public-private partnerships and collaborate with foreign organizations for advice and knowledge.

It is also crucial to improve our institutional capacity and governance & justice frameworks by implementing transparency, accountability, and efficiency in public financial management. It is also crucial to continue putting into practice effective anti-corruption measures and enforcing strict penalties for corrupt practices.

It is also essential to have a thorough and varied approach to adequately solve Pakistan’s economic and governance issues as stated above. To execute reforms, enhance income collection, and ensure efficient resource allocation for long-term economic growth and development, this calls for coordinated efforts by the government, corporate sector, civil society, and international partners, It is also important to increase trade prospects, promote economic cooperation, and entice foreign investment, Pakistan should establish an independent institution and provision of one window facility to actively participate in regional and global economic integration activities, and to pursue bilateral trade deals while taking part in regional forums like CEPC, the Belt and Road Initiative (BRI), Shanghai Corporation, and nations in Central Asia and the Middle East, and most importantly to attract Overseas Pakistanis for their economic participation and investment.

The writer is a practicing lawyer at Supreme Court and has served as Chairman, Federal Excise & Sales Tax Appellate Tribunal and Senior Advisor Federal Ombudsman. He can be reached at: [email protected].

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Pakistan: Five major issues to watch in 2023

Subscribe to the center for middle east policy newsletter, madiha afzal madiha afzal fellow - foreign policy , center for middle east policy , strobe talbott center for security, strategy, and technology @madihaafzal.

January 13, 2023

1. Political instability, polarization, and an election year

Politics will likely consume much of Pakistan’s time and attention in 2023, as it did in 2022. The country’s turn to political instability last spring did not end with a dramatic no-confidence vote in parliament last April that ousted then Pakistani Prime Minister Imran Khan from office. Instability and polarization have only heightened since then: Khan has led a popular opposition movement against the incumbent coalition government and the military, staging a series of large rallies across the country through the year.

The struggle for power in Pakistan continues into 2023. While the incumbent government has not ceded to Khan’s demand for early elections, country-wide elections are constitutionally mandated to be held by October this year. It benefits the government politically to hold them off as long as it possibly can as it tries to dig itself out of Pakistan’s urgent economic crisis and its lackluster domestic performance (its diplomatic foreign policy approach has fared better, but that may not matter for elections). The last year has cost it precious political capital, and Khan’s party did very well in a set of by-elections held in July and October. The state has tried to mire Khan and his party in legal cases, relying on a familiar playbook used against opposition politicians in Pakistan, albeit to limited effect, with the courts’ involvement.

Khan’s party still controls two of Pakistan’s four provinces, Punjab and Khyber Pakhtunkhwa (KP), and the incumbent federal government’s (extra-legal) efforts to try to wrest power from it in Punjab, the largest province, have been unsuccessful (thanks to the courts). The year is off to a dramatic start, with Khan’s party initiating the process to dissolve the Punjab and KP assemblies this month to pressure the federal government into early elections.

For politics-obsessed Pakistan, the biggest question remains who will win the next general election. Will former Prime Minister Nawaz Sharif (brother of current Prime Minister Shehbaz Sharif) return to Pakistan to run as the head of his party, the PML-N? Can Imran Khan win on the strength of his popular support, despite his confrontation with the military? Regardless of the outcome, we can say this much given the histories of the main contenders: The direction of the country is unlikely to change.

2. A precarious economic situation

Pakistan’s economy has been in crisis for months, predating the summer’s catastrophic floods. Inflation is backbreaking, the rupee’s value has fallen sharply, and its foreign reserves have now dropped to the precariously low level of $4.3 billion, enough to cover only one month’s worth of imports, raising the possibility of default.

An economic crisis comes around every few years in Pakistan, borne out of an economy that doesn’t produce enough and spends too much, and is thus reliant on external debt. Every successive crisis is worse as the debt bill gets larger and payments become due. This year, internal political instability and the flooding catastrophe have worsened it. There is a significant external element to the crisis as well, with rising global food and fuel prices in the wake of Russia’s war in Ukraine. The combination of all these factors has spelled perhaps the greatest economic challenge Pakistan has ever seen. Yet the government has been mired in politicking, and the release of a $1.1 billion loan tranche from the International Monetary Fund (IMF) remains stalled as Islamabad has pushed back on the IMF’s conditions. The government has now resorted to limiting imports and shutting down malls and wedding halls early, small measures that fail to adequately address the problem.

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Pakistan may end up avoiding default for the time being with IMF help and loans from friendly countries, especially Saudi Arabia and other Gulf nations. But those won’t address the clear underlying malaise of the economy – and the fact that something fundamentally will need to change, in terms of how much the economy produces versus how much it spends, to avoid default down the road. But none of Pakistan’s political parties seem to have the political will or ability to bring about such change.

Pakistan must reportedly pay back $73 billion by 2025; it won’t be able to do so without debt restructuring.

3. Flood recovery

A “ monsoon on steroids ” – directly linked to climate change – caused a summer of flooding in Pakistan so catastrophic that it has repeatedly been described as biblical. It left a third of the country under water – submerging entire villages – killed more than 1,700, destroyed homes, infrastructure, and vast cropland, and left millions displaced.

More than four months after the worst of the flooding, nearly 90,000 people are still displaced from their homes, and the floodwater is still standing in some areas. It would be enormously difficult for any country to recover from such a disaster and rebuild lost infrastructure, including roads and schools, let alone a government dealing with a cash crunch like Pakistan’s.

But the Pakistani government – in particular the foreign minister Bilawal Bhutto Zardari, who has visited the United States twice since the summer, and the minister for climate change, Sherry Rehman – has done an admirable job bringing awareness of the flooding catastrophe to the world stage. A donors’ conference Sharif co-hosted with the United Nations Secretary General Antonio Guterres in Geneva this month raised pledges for more than $9 billion for flood recovery over the next three years (the money is mostly in the form of project loans). Pakistan has also played an important role in discussions about the devastating effects of climate change on developing nations, spearheading the effort to place loss and damage on the agenda at COP27 for the first time, and pushing for COP delegates in Egypt to agree to a loss and damage fund.

With billions of dollars in help promised, the government has passed one hurdle. But the road for recovery ahead will be tough: Displaced people are still sleeping under open skies in Sindh province. Implementing a sustainable recovery will require enormous capacity, resources, and transparency in a country already mired in other troubles.

4. Mounting insecurity

The Pakistani Taliban (or TTP), the terrorist group responsible for killing tens of thousands of Pakistanis from 2007 to 2014, have been emboldened – predictably so – by a Taliban-ruled Afghanistan, and once again pose a threat to Pakistan, albeit in a geographically limited region (for now). The group engaged in at least 150 attacks in Pakistan last year, mostly in the northwest. Because the TTP have sanctuary in Afghanistan, the Pakistani state increasingly finds itself out of options when it comes to dealing effectively with the group. The state’s negotiations with the TTP have failed repeatedly, as they are bound to, because the group is fundamentally opposed to the notion of the Pakistani state and constitution as it exists today. The Afghan Taliban have, unsurprisingly, also not proved to be of help in dealing with the TTP – and Pakistan’s relations with the Afghan Taliban have deteriorated significantly at the same time over other issues, including the border dividing the two countries.

At this point, Pakistan’s first preference will be to strike kinetically at TTP targets within its borders, but that will be limited by TTP movement across the border into Afghanistan. That movement is what leaves Pakistan with the difficult-to-resolve TTP issue and complicates things beyond the military operation it launched against the group in 2014. Still, the Pakistani Taliban at this point is not the biggest threat Pakistan faces, given the country’s major political and economic challenges – but left unchecked, it could morph into a significant crisis.

5. Civil-military relations

Pakistan has a new chief of army staff as of November 29 last year. General Asim Munir replaced General Qamar Javed Bajwa, who had held the all-powerful post for six years (due to a three-year extension). The appointment of the army chief was a subject of considerable political contention last year; a major part of the reason Khan was ousted from power was his falling out with the military on questions over the appointments of top army officials.

All eyes are now on how civil-military relations shape up under Munir. Under Bajwa, the military solidified its control over all manner of policy behind the scenes. Bajwa presided over a close “same-page” relationship with Khan; when that frayed, the PML-N was eager to take Khan’s place as the military’s ally and head of the civilian government. Bajwa left office saying the army would no longer be involved in political matters; few in Pakistan believe him. With politics set to dominate the agenda this year and an election imminent, Munir has a chance to show the country whether he will follow in his predecessor’s footsteps, or chart a new course for civil-military relations in Pakistan. Pakistan’s history indicates the former.

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Essay: Pakistan is not a failed state, but a state of failing governance

2023, Pakistan is not a failed state, but a state of failing governance

This abstract provides a comprehensive overview of the intricate relationship between governance and the pursuit of a thriving state in Pakistan. It unveils the insensitivity of Pakistan's governance to effective principles, hindering its path to success. Through a detailed exploration of governance failures – from the lack of citizen protection to economic downturns and widespread corruption – the narrative emphasizes the nation's enduring resilience. Rooted in traditions, entrepreneurial spirit, and democratic yearning, this resilience defies governance hurdles. The essay concludes by advocating for holistic governance reform, sustainable economic strategies, resource allocation for education and welfare, inclusive politics, and global engagement as transformative solutions for Pakistan to overcome challenges and emerge as a thriving state.

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This book analyses problems of governance, development and environment affecting contemporary Pakistan, issues that lie at the centre of federal and provincial policy deliberations, formulation and implementation. Perspectives on Contemporary Pakistan offers a comprehensive assessment of these policies, or their lack thereof. Authors from a variety of disciplines empirically and conceptually evaluate the latest developments, events and data regarding law and order, economic under-performance, social intolerance and climate crisis. The book offers varied perspectives on state sovereignty, civil-military relations, spousal violence, rural development, the China-Pakistan Economic Corridor, nuclear governance and transboundary climate risk.

Azhar Aslam

Pakistan has been in crises since its birth. Therefore, everyone knows the disparities Pakistan has in its socio-political and economic domains. In this paper, an alternate structure of governance is given for the resolution of all horizontal and vertical cleavages existing in the country for last sixty-seven years. Therefore, it is call of the day that we must contemplate for an alternate structure of governance. In this paper we are devising a strategy that may sustain our identity that is in question in the contemporary world. This paper is based on empirical analysis.

adnan sultan

Pakistan has been concerned for the improvement of its institutional and human capacity to improve the livelihoods of its citizens since its inception. This surge for improvement in the lifestyle of its citizens is assessed by the level of good governance in the country. Pakistan lags far behind in the field of governance, as the same is evident from the world reports on governance. Pakistan needs to review and revise its policies to earn effective and efficient governance practices. Law and order, energy, economy, political stability and national harmony are the key governance issues in Pakistan, which need comprehensive policy response. Pakistan has to overcome its shortcomings in the corruption control, accountability and mal-administration through legal frameworks in support, to ensure the good governance. Pakistan can achieve the good governance by introducing integrity, coordination, cooperation among individuals as well as institutions, besides the economic sustainability and proper policy process implementation.

The Pakistan Development Review

Hyder Yusafzai

Tasneem Ahmad Siddiqui is a former civil servant who has written a book that is in tune with the governance issues being faced by Pakistan on a variety of fronts. The author has had much experience of the grassroots level and provides the reader a view of the changes at that level for a dynamic societal change. There is clear evidence of the faith that he seems to have in the resourcefulness of the people of Pakistan. The hallmark of the book is its concise and easy reading with not just criticisms but workable solutions that are offered by the author. At the outset, the crisis being faced by Pakistan is highlighted. The author delves into the historical antecedents of this crisis, apportioning blame to the Harvard Advisory Group, as it was their flawed development strategy with a pro-industry bias that ignored agriculture. They believed in jump-start modernisation without giving serious consideration to the fact that Pakistan has a strong agricultural base. The stated wisdom of suc...

Aquarius Ruler

The purpose of this research report is to demonstrate and illustrate the good governance scenario in Pakistan also highlight the current problems and their proposed solution. This idea of governance is not developed from outside human’s experience throughout the ages. This is primarily laid on the lessons from historical backgrounds which recorded both the collapse of different nations that was resulted from the bad governance and also lessons on how distinct nations raised to greater heights as a result of good governance. The government of the state requires to make sure the provision of fundamental social services involving infrastructure poverty reduction programmes, provision of fundamental education to its masses, easy access to health care, protection of environment from pollution and dangerous chemicals as well as security of its public masses. The government is not supposed to ensure the provision of all these services by itself.

Vivekananda Nemana

Pakistan, a nation of 185.5 million people and a neighbor to Afghanistan, India and China -- in other words, a country of paramount strategic importance -- is in danger. Unlike other failed states, both a democratic government and a semblance of civilian infrastructure remain intact, and yet the nation is ranked #10 on the 2010 Foreign Policy and Fund for Peace's Failed States Index. Out of the 12 axioms that govern the index, Pakistan scores especially poorly on 'Security Apparatus,' 'Factionalized Elites,' 'Group Grievances,' and 'External Intervention.' A truly failed Pakistani state has grave implications for the international community. In addition to posing terrible physical, economic and humane costs to Pakistani society and citizenry, which constitutes the sixth-most populous nation in the world, a full-blown failure will surely lead to an explosion in militancy that places destabilizing pressures on sensitive neighboring countries. In this paper, I present a reform strategy to overhaul the country's political and economic stability and ensure security, while building on the country's robust elements. Some priorities of this approach are: i) the immediate provision of necessary services and security to disenfranchised groups such as women, minorities and rural peoples, ii) better enforcement of property rights to promote economic development, iii) increased transparency and accountability while reducing bureaucracy, iv) reformation of rules currently governing the security arms of government, v) improving communication between various branches of the state and iv) expanding access low-cost technological developments such as mobile phones in ways that can both empower the Pakistani people and reinforce the pursuit of institutional reform. The rules of the state must change to better reflect the nature of Pakistani society. I first express the policy goals of this strategy and briefly explain the ideology behind the strategy. I then provide a brief history of the nation, survey relevant statistics and identify key players. I will elaborate in detail the challenges facing Pakistan, and the questions we must consider when dealing with these challenges. I finally deliver my proposals to achieve each one of these policy goals, as well as my plans for their funding and implementation. I conclude with an overview of the anticipated effects of a fully-implemented strategy, and some finishing thoughts.

https://www.researchgate.net/publication/237557751

Adlakhan Ahmad

In this paper, governance is defined as the manner in which power is exercised in the management of a country’s economic and social resources for development. “Good Governance” is then synonymous with sound development practices. Vital reforms for public expenditure may flounder if accounting systems are so weak that budgetary policies cannot be implemented or even monitored; if poor procurement systems encourage corruption and distort public investment priorities. This only illustrates a broader point; good governance is central to creating and sustaining an environment which fosters strong and equitable development. Governments play a key role in the provision of public goods. They establish the rules that make markets work efficiently, and they correct for market failure. In order to play this role, they need revenues, and ‘agents’ to collect these revenues. This in turn requires systems of accountability, adequate and reliable information, and further, efficiency in resource management and delivery of public services.

Akmal Hussain

parvez hasan

Pakistan has been facing a deep-seated economic and financial crisis and seemingly intractable governance issues for the last few years. Factors such as international sanctions and global economic slowdown, which have worsened Pakistan’s economic difficulties, were beyond Pakistan’s control. But by and large, the country’s economic and financial difficulties are the result of economic mismanagement in key areas over long periods. Bad governance, as reflected in widespread corruption and poor delivery of public services, and especially poor law and order have given birth to a crisis of confidence in the state. It is argued here that despite this scenario, a long and arduous process of building institutions, setting the policies right, and enforcing a rule-based governance stressing both merit and accountability can put Pakistan back on the road to shared prosperity. Resolving financial problems, accelerating demographic transition, exploiting tremendous agricultural potential, improv...

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An Analysis of Pakistan’s Economy in 2023

Pakistan’s Economy in 2023: Analyzing Its Challenges and Prospects

Pakistan’s economic situation in 2023 is marked by both challenges and opportunities, according to an Analysis of Pakistan’s Economy 2023. While many have suffered through difficult times economically recently, signs of growth and stability are emerging across the board.

Pakistan Is Facing 10 Economic Challenges

Pakistan’s rapid population growth – estimated at 2.2% annually – has placed additional strain on resources within the country. Leading to unemployment, poverty and inequality issues.

Pakistan suffers from inadequate infrastructure that is unable to keep pace with the growing needs of its rapidly increasing population. Hampering economic development and making it harder for businesses to compete against international rivals.

Low Tax Revenues: Pakistan suffers from an inadequate tax-to-GDP ratio. Meaning the government lacks enough revenue to finance public services and stimulate economic activity.

Deteriorating Public Finances:

Pakistan’s public finances have seen significant deterioration over the years, with budget deficit and public debt increasing significantly – exacerbating economic difficulties further.

An Ineffective Banking System and Economy:

Pakistan’s banking system is ineffective and cannot meet the needs of its population. Thus impeding economic development as businesses struggle to access funds necessary for growth.

Weak Regulatory Environment:

Pakistan suffers from an inadequate regulatory environment , which hinders economic development. Corruption and cronyism have proliferated throughout society as a result, further undermining progress toward economic advancement.

Lack of Investment in Economy:

Pakistan has not been successful at attracting sufficient foreign direct investment (FDI). An essential ingredient of economic development as it provides capital, technology, and access to new markets.

Human Capital Inadequacy:

Pakistan lacks an adequate pool of educated workers, which has limited its economic growth potential.

Poor Education:

Pakistan suffers from an inadequate educational system that has inhibited its citizens’ development of human capital and made them less competitive in global economies.

Pakistan is facing numerous security concerns that have prevented economic development, including terrorist attacks, political instability and regional tensions.

The current account deficit

Pakistan’s economy faces several serious obstacles. One being its current account deficit which has steadily been widening for several years now. This trend can be partly attributed to a large trade deficit and declining exports that has reduced foreign exchange reserves. Inflation also remains an ongoing concern as rising prices erode consumers’ purchasing power.

Pakistan’s economy has experienced substantial improvements.

Pakistan has experienced some positive economic developments despite these obstacles. Pakistan has made significant strides toward stabilizing its fiscal situation by taking measures to reduce budget deficit. And boost revenue collection, and by making efforts to attract foreign investment to spur economic growth.

Enhancing Infrastructure Development in Pakistan.

Recent years, Pakistan has also focused on strengthening its infrastructure, with particular attention being given to improving transportation and energy systems. Such investments should ultimately pay dividends by increasing productivity while simultaneously decreasing business costs in Pakistan.

Pakistan’s growing technology sector, which is driving innovation and increasing competitiveness. Pakistan boasts a vibrant startup ecosystem featuring many young entrepreneurs creating products and services which they hope can be exported abroad.

Even with these successes, however, the country still faces significant obstacles. Most notably, more must be done by government to address poverty and inequality. Two persistent issues in many parts of the country. Furthermore, improvements need to be made in business climate and make it easier for entrepreneurs to launch and expand their companies.

While Pakistan’s economic situation in 2023 presents both challenges and opportunities, there is reason for optimism. Recent progress made has resulted in some success; with continued efforts being put in to tackle its financial difficulties. It should be well positioned for building a more secure future.

Are IMF debt traps the real danger for Pakistan’s economy in 2023?

International Monetary Fund (IMF) loans have long been seen as being an economic debt trap for certain nations, such as Pakistan. Critics allege that IMF loan conditions can lead to an endless cycle of debt. And austerity measures that damage both economy and people in these nations.

Proponents of IMF programs maintain that these loans provide essential funding for countries facing economic difficulty. and that the conditions attached to these loans are essential in helping restore economic equilibrium and foster sustainable development.

Pakistan has received IMF assistance on multiple occasions in the past, though some of their conditions can be controversial. For example, Pakistan was required to implement austerity measures such as cutting spending and raising taxes that may prove challenging when facing economic instability.

Experts contend that Pakistan has benefitted greatly from IMF assistance in terms of meeting its key economic challenges, such as reducing fiscal deficit and stabilizing foreign exchange reserves. Furthermore, technical assistance was given by IMF which has helped strengthen Pakistan’s policies and institutions.

The International Monetary Fund is often seen as a debt trap for Pakistan’s economy. Though various experts hold differing viewpoints on the matter. While IMF programs can present challenges that require creative solutions and may hinder sustainable growth and stability in some instances. They can also be invaluable support in times of difficulty and provide invaluable assistance when times get rough.

Why experts consider IMF a Debt Trap?

Experts describe the International Monetary Fund as a debt trap for various reasons, including:

Conditions can be stringent:

International Monetary Fund loans come with stringent conditions that may include austerity measures and structural reforms. That can be difficult for countries to implement and can have far-reaching economic and social ramifications.

Cycle of Debt: IMF loans often carry with them strict conditions that force countries into an endless cycle of debt repayment; the country often taking on additional loans just to service previous ones. This burden of repayment is difficult to escape.

Harmful impacts on economy:

IMF-mandated austerity measures such as cutting spending and raising taxes can damage both a country’s economy and its citizens, including reduced consumer spending and economic growth.

Long-term impact on economy:

IMF loans may have significant long-term repercussions for an economy and its citizens. For instance, cutting spending on social programs may worsen poverty and inequality, while decreasing public sector size could have adverse effects on job creation and economic development.

Unwanted focus on development:

Critics contend that the IMF’s emphasis on macroeconomic stability and fiscal discipline can come at the expense of development and poverty reduction efforts that are vital components of long-term growth and stability.

Experts often refer to the IMF as a debt trap due to its stringent loan conditions and subsequent debt cycle, harmful effects on economies and citizens, long-term consequences, and lack of focus on development.

Will Pakistan be able to increase economic growth over the coming years?

Forecasting Pakistan’s economy can be difficult, but certain factors could have an effect on its ability to expand in coming years.

Political Stability: An attractive political environment is essential to attracting investment and supporting economic expansion. If Pakistan can maintain stability through reforms that foster an enabling business environment, its economy could see substantial improvements.

Reforms: Over the past several years, Pakistan’s government has implemented numerous reforms designed to enhance tax collection, reduce budget deficits and stabilize currency exchange rates. If these reforms continue along with measures designed to spur economic development, Pakistan could improve its economic outlook significantly.

Investment: Pakistan relies heavily on foreign investment to bolster its economy. If the government can create an environment conducive to investors, attracting sufficient funds could drive economic development forward.

Export Growth: Pakistan relies heavily on exports as an engine of economic expansion; thus increasing exports will be vital if it wants to achieve sustained economic development. If the government can improve competitiveness of exports and thus boost growth and the economy simultaneously.

Infrastructure Development: Infrastructure expansion.

Investment in infrastructure such as transportation and energy systems can reduce business costs while simultaneously increasing productivity. If governments continue investing in this area, economic growth could increase significantly and open new doors for business and industry.

Conclusion In summation, Pakistan’s economic success will depend on various factors including political stability, reforms, investment decisions, export growth and infrastructure development. If the government can overcome any hurdles to sustainable economic development and create an ideal environment for sustained economic development then Pakistan may achieve sustained economic stability and growth in coming years.

Conclusion Pakistan’s economic situation in 2023 was determined by a combination of factors, including government reforms, investment decisions, export growth and infrastructure development. While political instability and austerity measures present challenges to economic progress, progress was also made with tax collection and decreasing budget deficits.

International Monetary Fund (IMF) loans have long been considered controversial in Pakistan due to their strict conditions, which can create a debt trap. Critics contend that IMF’s focus on macroeconomic stability and fiscal discipline may come at the cost of development efforts and poverty alleviation initiatives.

Pakistan’s ability to successfully diversify and strengthen its economy over the coming years will depend on several key elements, including political stability, reforms, investment decisions, export growth and infrastructure development. If the government can maintain stability while creating an environment favorable to business and investment activity then sustained economic growth may be possible – yet with so many challenges still standing in its way it may take considerable effort and patience in order to realize lasting economic success for Pakistan.

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Challenges Facing Pakistan in 2023

• February 3, 2023 |

Mary Hunter ,

• Image Credit: Unsplash

A challenging year lies ahead for Pakistan as it negotiates the aftermath of the unprecedented floods, economic turmoil, the desire among the youth to leave and the ongoing struggle against terrorism. The reader should not conclude that because this article only tackles challenges, the author has not noted recent positives and opportunities for Pakistan. To the contrary, 2022 saw Pakistan lead the international community in matters of climate justice, helping to secure the historic loss and damage deal. Depending on how much progress is made by COP28 this year, this could mark a fundamental shift in climate negotiations that works to support further countries vulnerable to climate change, like Pakistan itself.

Pakistan is also stepping out of a global year for popular culture and the arts, which will motivate the creation of further artistic outlets and help to bridge Pakistans film and music industries with others around the world. Academic events like ThinkFest held in Lahore and the Pakistan Conference hosted by Harvard University last year, marking 75 years of independence, testified to a burgeoning intellectual culture, an interest among the youth in tackling contemporary challenges and a strong international interest in Pakistan Studies. Pakistan will have to balance these positives and opportunities with very challenging circumstances, not all of the origins of which were avoidable.

Pakistan will have to balance these positives and opportunities with very challenging circumstances, not all of the origins of which were avoidable.

The Aftermath of the Floods

It has been well-documented that the floods in Pakistan last year, caused by increased monsoon rainfall, have affected over 33 million people. The ongoing consequences of much of Pakistan going underwater have made dire conditions a daily reality for many, especially children. UNICEF, whose health interventions have reached nearly 1.5 million people to date, has warned that up to 4 million children are still living near contaminated and stagnant flood waters: Frail and hungry children are fighting a losing battle against severe acute malnutrition, diarrhoea, malaria, dengue fever, typhoid, acute respiratory infections, and painful skin conditions. (sic)

Besides health concerns, UNICEF has found that 2 million additional children have been locked out of learning, on top of the estimated 22.8 million children aged 5-16 not in school after the destruction of nearly 27,000 schools. Thus, the floods have exacerbated poor health and educational outcomes for the next generation of Pakistanis, who will also have to contend with more serious and frequent extreme weather events unless the world gets serious about reducing global temperatures. Given Pakistans acute vulnerability to climate change, it will have to increasingly treat the phenomenon as a non-traditional threat and prepare accordingly in its national security estimations.

Economic Turmoil

While the human impact of floods must be the most central concern for Pakistan and the international community, the economic impact is unprecedented. The World Bank has estimated that total damages exceed 14.9 billion USD and total economic losses amount to around 15.2 billion USD, while rehabilitation and reconstruction will cost close to 16.3 billion USD. The organisation also projected that Pakistan lost around 2.2 per cent of Fiscal Year 2022 GDP as a direct result of the floods.

To make matters worse, there are concerns that Pakistan may default on its loans to the IMF. Miftah Ismail, the former finance minister, has warned that Pakistans expenses are much higher than its income and that the country could default if it fails to approach the IMF. The IMF defines defaulting in simple terms as a broken promise, or a breach of contract, such as through missed payments or data misreporting. The consequences of Pakistan defaulting on its loans include an inability to import fuels to generate electricity, resulting in blackouts, as well as increased unemployment. Pakistanis already have to cope with inflated food prices and competition for subsidised products.

The Desire Among the Youth to Leave

Pakistanis rightly emphasise how the countrys youthful population is a great source of potential, but the young are among the most likely to express a desire to leave Pakistan. This desire, as reflected in a survey published in November 2022 by the Pakistan Institute of Development Economics, has translated into reality for a considerable number. Official documens allegedly show that 765,000 people left Pakistan in 2022, nearly triple the number in 2021. Given that 92,000 of these people were classed as highly educated, this flurry of departures has been presented as a continuation of the countrys brain drain. The government of Pakistan thus faces the challenge of incentivising its talented youth to remain in Pakistan and encourage those who have left to return. Based on anecdotal evidence, some Pakistanis who have left the country for higher education feel that there are not the same opportunities at home, leaving their only options to be jobs for which they are overqualified.

Ongoing Struggle Against Terrorism

Three police officers sadly lost their lives in the first terror attack in Pakistan of 2023, when heavily armed terrorists attacked a police station in Peshawar on the 14 January. This comes after the conclusion of an indefinite ceasefire between the government of Pakistan and the Tehreek-i-Taliban Pakistan (TTP) on the 23 rd of November, that was agreed upon in June. Following an absence of attacks in the capital of Islamabad for eight years, the first suicide bombing occurred at the end of December inside a taxi, leaving the driver, bomber and a police officer dead.

Outside of the capital, the inhabitants of Swat demonstrated in October against increased killings in one of the largest protests the valley has seen to voice not only the rejection of political violence but also to demand protection as a constitutional right. While the progress and sacrifices made by the Pakistani military and police forces in addressing terrorism should be noted, attacks will continue until more successful peace talks are held with the TTP. This is by no means a simple task, given the mutually opposing demands of the TTP and the government of Pakistan, especially in terms of the TTPs rejection of the constitution of Pakistan as un-Islamic.

Dealing with any of these challenges in isolation would be difficult, but their simultaneous existence will require the government of Pakistan to rehabilitate and reconstruct those communities devastated by the floods while also seeking long-term security, economic, and educational solutions that also give hope and opportunities to the youth of Pakistan. The more the youth become central to policy-making, both as stakeholders and as visionaries, the more sustainable and forward-looking Pakistan will become.

Mary Hunter

Mary Hunter is a PhD candidate at the University of St Andrews, researching the Islamisation of Pakistan. She is also a freelance writer on issues relating to Islamophobia, Pakistan and its diaspora in the UK.

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UN projects Pakistan’s economy to grow by 2 percent in 2024

NEW YORK    -    Pakistan, which faces significant eco­nomic challenges, is expected to have “modest economic growth”, with its gross domestic product (GDP) projected to expand by 2 per cent in 2024, accord­ing to a major United Nations report.

Noting that Pakistan had entered into a Stand-by Arrangement with the Inter­national Monetary Fund (IMF) worth $3 billion, the mid-year World Eco­nomic Situation and Prospects report said that the programme was expected to help stabilize the economy, increase the country’s foreign exchange reserves, and facilitate fiscal adjustment while also protecting crucial social spending. At the same time, it said that in South Asia tight financial conditions and fiscal and external imbalances will continue to weigh on growth in the near term.

“In addition, geopolitical tensions – including the ongoing war in Ukraine and the conflict in Western Asia – will expose net-oil-importing countries in the region, including India, to the risk of sudden oil price spikes.” Most coun­tries in South Asia, according to the report, experienced currency deprecia­tion pressures during the second half of 2023. Between July and October, the United States dollar climbed by around 6.5 per cent against a basket of global currencies, reaching its highest level in 11 months, mainly supported by the strong performance of the American economy and high interest rates.

Experts stress on importance of technical skills

“Thus,” it said, “between July and Octo­ber, the Sri Lanka rupee depreciated by 3.2 per cent against the U.S. dollar, while the Indian rupee depreciated by 1.2 per cent. After raising policy rates in 2022, most central banks in South Asia paused monetary tightening or started lower­ing their key policy rates in 2023, with a few exceptions. In this regard, the report noted that the State Bank of Pakistan has kept its policy rate unchanged at a record high of 22 per cent since June 2023.

In 2023, it said, the number of people facing acute food insecurity increased in Bangladesh and Pakistan and decreased in Sri Lanka. Afghanistan continued to be the country most affected by the food cri­sis in the region, with around 46 per cent of the population facing acute levels of food insecurity. Ever-worsening climate shocks are also a challenge, threatening decades of development gains, especially for the world’s Least Developed Coun­tries (LDCs) and small island developing States (SIDS), the report said.

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“Droughts intensified considerably during July and August (2023), affecting most of India, Nepal, and Bangladesh, while Pakistan recorded above-average rainfall,” it said. As far as the global econ­omy is concerned, it is now forecast to grow by 2.7 per cent in 2024 (an increase of 0.3 percentage points from the fore­cast in January) and 2.8 per cent in 2025 (an increase of 0.1 percentage points).

These changes are mainly due to bet­ter-than-expected performance in some large developed and emerging countries, notably Brazil, India, Russia and the United States, the report said. Inflation is also down from the 2023 peak, said Shantanu Mukherjee of the UN Depart­ment of Economic and Social Affairs (DESA), presenting the report to report­ers in New York. “In developed countries, tight labour markets are seeing wage in­creases for some parts of the population and also drawing people into the labour force, which is important,” he added.

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However, the outlook is only cautiously optimistic in the face of higher-for-longer interest rates, debt sustainability risks and continuing geopolitical tensions. Even though prospects for SIDS are be­ing revised upwards to about 3.3 per cent each year, Mukherjee said this is still be­low the pre-pandemic average, meaning that “lost ground is still not being made up.” In the case of Africa and LDCs in gen­eral, prospects are revised downward to about 3.3 per cent growth in 2024.

“This is particularly worrying because Africa is home to about 430 million living in extreme poverty and close to 40 per cent share of the global undernourished population,” Mukherjee explained. Fur­thermore, two-thirds of the high-infla­tion countries listed in the report are on the continent. “In 2024, over a quarter of public revenues on average in this con­tinent went towards interest payments. That’s again about 10 percentage points more than the average over the years im­mediately preceding the pandemic.”

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For developing countries, on aver­age, the debt situation is not as dire, but he was concerned that investment growth continues to fall, it said. These “downsides” are further compounded by risks such as inflation, which is both a symptom of the underlying fragility and a concern on its own. The report also contains a special section on criti­cal minerals such as lithium, nickel, co­balt, and copper, that are essential for the transition to clean energy.

Countries that possess these resources will, however, need smart policies, as well as effective implementation capaci­ties to reap the benefits. Mineral-sector-driven growth has in the past often been associated with environmental damage, stunted development of other sectors, poverty, conflict, and other adverse out­comes collectively known as the “re­source curse”. “It is imperative for devel­oping countries to design and implement well-targeted and timely economic, so­cial, and environmental policies to opti­mize the benefits of their critical miner­als endowments and avoid another cycle of resource curse,” the report said.

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IMF warns of high downside risks for Pakistan's economy

I slamabad [Pakistan], May 11 (ANI): The International Monetary Fund ( IMF ) has issued a stark warning about Pakistan's economic future, highlighting exceptionally high downside risks in its latest report.

The report, released ahead of talks between the Pakistani government and the IMF on a new long-term programme, underscores concerns about the country's stability and the challenges it faces, Dawn reported.

According to the IMF staff report, " Downside risks remain exceptionally high. While the new government has indicated its intention to continue the SBAs (standby arrangement) policies, political uncertainty remains significant."

This uncertainty, it warns, could have profound effects on policymaking, particularly given the high cost of living and other political complexities.

The IMF also cautions that policy slippages, coupled with decreased external financing, could derail Pakistan's progress towards debt sustainability and put pressure on the exchange rate.

Furthermore, external stability is threatened by factors such as higher commodity prices, shipping disruptions, and tighter global financial conditions, all of which could exacerbate the nation's financial challenges, as reported by Dawn.

Emphasising the urgency of the situation, the IMF stresses the importance of timely disbursements of post-programme external financing. While Pakistan recently completed a short-term USD 3 billion programme, Prime Minister Shehbaz Sharif has underscored the need for a fresh, longer-term arrangement to address the country's ongoing economic issues.

Last summer, Pakistan narrowly avoided default , and since then, the economy has stabilised, with inflation dropping from a record high of 38 per cent in May to around 17 per cent in April. However, significant challenges persist, including a high fiscal shortfall and stagnant growth, which is projected to be around 2 per cent this year, compared to negative growth last year.

To address these challenges, Pakistan is expected to seek at least USD 6 billion from the IMF and request additional financing from the Fund under the Resilience and Sustainability Trust, Dawn reported. (ANI)

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Pakistan’s Economy Faces Structural Challenges Amid Political Uncertainty

KARACHI, Pakistan, May 16 – Despite some improvement in macroeconomic indicators, the economy continues to grapple with structural bottlenecks exacerbated by political uncertainties and inconsistent policies, said the State Bank of Pakistan (SBP) on Tuesday.

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NATIONAL NEWS

Saudi authorities agree to postpone execution of stephen munyakho.

Public Benefit Organisations Act comes into effect tomorrow

County News

Gachagua echoes mt kenya’s ‘one-man-one-shilling’ chorus for fair revenue sharing.

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New finance bill 2024 proposes new motor vehicle tax to support kenya kwanza government projects.

M-PESA Foundation invests Sh77 million towards medical camps in 12 counties

Amb Kimani concludes tour of duty in New York

‘Abandon your cars if you must’: Kimani defends 2.5pc wealth tax on cars

Kenya’s new planned tax hikes spark anger

13 killed in attack by paramilitary forces in central Sudan: resistance committee

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